Dow industrials fell 700 on fears bailout package vote would fail, but later recovered to a loss of about 400. Right now the “Nays” are winning, but the voting is still open, and arms are apparently still being twisted and anything could happen. No bailout. The House defeats the bill on the $700 billion rescue plan 228-205.[WSJ]

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Good job Dems. You don’t send it to a vote unless you know it’s going to win.

Now it looks like the Dems are supporting the fat cats on Wall Street, while the Repubs are fighting for the little guy. That’s a nice recipe for unexpectedly losing seats in the House after the election. I can already see the congressional ads now…

@snoop-blog: I agree, but I’m only talking about the congressional races in a few weeks. While bad in the long run, it’ll help repubs win extra seats, since most “blue-collar” voters are against the bailout. The only way it hurts repubs in the short term is if the Great Depression 2 occurs full force before the election occurs. It may happen, but if it does, it’ll be months after the election.

If it passes, it has to pass by a wide margin, otherwise, what’s the point, if market perception is the goal. Leadership on both sides shouldn’t let any members sit back and let others do the lifting.
And if the Neanderthal wing of the GOP push for any changes, the Progressive wing damn well better throw in their more consumer-friendly measures. No letting right-wing, crybabying bomb-throwers pout until their lobbyist buddies are left flush with tax-payer funded cash.

Being the markets have taken a hit, an argument can be made that perhaps it’s better to back off and let Wall Street clean up their own damn mess.

@Trai_Dep: More bipartisan then most bills that have passed Congress in the past decade or so. At least Pelosi can say, “hey, we tried, but the Republicans would rather be partisan than get on board, and see what happened?”

FWIW, I think Congress ought to call Paulsen’s bluff, adjourn, and let the next President and Congress deal with it. They made their bed; they can lie in it.

@HurtsSoGood: Oh yeah. Don’t get me wrong – there’s one side this morass points to, from creation, to ignoring to attempted fixing (such as can be done after a globe-crippling f*ck-up as they did).
And when it comes down to it, the “maverick” GOP Neanderthal’s solution:
* Cut the Cap Gains Tax!
* Offer insurance (what, two trillion-dollar mortgage companies, Freddy and Fanny, aren’t enough; and do these people even know how insurance works?!)
* Manfully assert that they’re the ones to clean Washington of the horrible Culture of Corruption foisted on them by those awful, venal… Err, Republicans.

> Pure political theater. While the global markets ignite. Nero would be proud.

The Nay-Voting Dems, on the other hand, want stronger assurances that victimized people will be helped if Wall Street titans get a $700B check, and more concrete – and punitive – measures ensuring that taxpayers will get their money back once (if) this thing blows over.

@Trai_Dep: Name-calling (e.g. “Neanderthals”) is not appropriate. While this thread does invite political discussion, let’s keep it above board and civil. You wouldn’t appreciate your party being called names, I gather?

@AngrySicilian: I’m sorry, didn’t realize I was coming off as either Liberal/Conservative, but I now see how it could be viewed as either depending on if you read the post as being either sarcastic or angst-filled.

@snoop-blog: This is Bush’s plan (well, Paulson’s, with Bush’s backing.) It’s also highly unpopular with the public. If the Republicans won’t stick their necks out to support their own president’s plan, there’s no way the Democrats are going to do so for them.

Because in a story on the Lehman bankruptcy today, the WSJ noted that the Tuesday morning following the announcement the London Interbank offered rate, the interest rate at which banks offer one another overnight loans – the interest rate to which some $300 trillion in contracts are anchored – rose from 3.11% the day before to 6.44% and “even at those rates, banks were balking at lending to one another.”
The two guys who actually calculate the Libor have not been on CNBC to my knowledge, but I bet I can tell you what they were thinking when they went through their spreadsheets that day: “Holy Fuck.”

So yeah, perhaps throwing grenades at a horrible, TINA plan without offering a viable alternative isn’t the most prudent – or patriotic – thing to do at this juncture.

@theblackdog: To be honest, I don’t know nearly enough about this stuff to form a reasonable opinion other than “Wall St. screwed the pooch; Wall St. can pay for the abortion.” I’m sure many members of Congress felt the same way.

If a bailout isn’t passed soon and there is no other infusion of capital into the credit markets, we’ll start to see strong corporations like McDonalds and Cat failing. Mark my words. The world economy will be screwed so bad that the great depression will small in comparison.

As one who is typically a GOP smpothizer, I have to say that the party has made me sick over the last week. At a time when our economy needs serious help there are people who place more emphasis on getting reelected.

@Bladefist: Why? Does it change that less than 1/3 of the President’s party voted for him? That they figure the odds are way down on getting reelected and if they do the right thing and vote for it, the odds approach zero of getting reelected?

Oh, where have all the Republicans gone? Long time hiding. Bush and Paulson have stared into the abyss and all the free-market, conservatism in the world provides no solution. The largest market intervention since FDR is proposed. How about that?

@HIV 2 Elway Resurrected: That bailout would sent the dollar into hyperinflation. The economy now is really screwed either way. The BEST thing that can happen is a severe recession for a year or so while the market corrects itself. The worst thing that can happen is for the government to keep interfering and prolong a 1930’s style depression where prices are all kept artificial.

@Bladefist: Wow, can somebody take a picture of this? Me and Bladefist actually agree on something. I too am against it but for it. It seems the only way to get a government bailout is to screw soo many people over, that you basically screwed over the entire world. Remember, other countries are hoping for us to rebound from this because of their investments.

It’s complete BS we’re here, but we need to figure out how to get out of it. I think simply chanting “no bailout” without offering some solution won’t help, unless you think banks are bluffing. But it can be damned expensive to try to call such a bluff.

I can’t really see any other way without some sort of heavy government intervention to buy the securities, guarantee certain mortgages, essentially some heavy duty government backing/insuring. My only condition is that we do this, we get heavy oversight and any upside of our “investment” for a long time to come.

@Bladefist: Yes it clearly does. Because your system of conservative, not liberal, free-market has failed to provide an answer to its own makings. So we get the biggest intervention in the markets by the government since FDR. And because your party is so afraid of the upcoming election, they figure a vote for it means high odds of electoral elimination, less than 1/3 of your party voted for your party’s president. They are more interested in getting elected than doing the right thing for their country. Now why doesn’t that surprise me?

@papahoth: It is the liberal enterprise (fannie/freddie) that caused all of this. The Free market did not sir. All these banks made loans to people who couldnt afford them, to comply with new government rules. They were promised the loans were backed by the government.

Nice try.

As my video (which you obviously didn’t watch) that i posted above shows, the majority of this problem didn’t come to the republicans. Your only hope is that most of America remains ignorant and in the dark about who started the mess.

And ya, you’re right, Bush has 0 power right now. Which is fine with me. He hasn’t impressed me in a long time. Also – Bush is the furthest thing from a fiscal conservative. Bill Clinton is a better conservative then Bush. (no joke)

@Bladefist: My uncle Bill said the same thing. In fact he told me about how it’s all Jimmy Carter’s fault, followed by Clinton!

Must admit I have not watched your video; I have not yet verified this information, but if in fact these banks were “Forced” to lend money to people who couldn’t pay them back, then that would be bad. However, you, and my uncle Bill, are both staunch Republicans (I’m assuming by your avatar), and I take any piece of trivia from such sources with about 1/2 cup of salt.

@Fist-o: I’m a conservative. Republicanism seems to be an idealogoy on the move, so I’m not sure if I am or not.

Bush and congress, had good intentions of getting more Americans into homes. The 20% needed to get a home was preventing people who cant afford that, from getting a home. So they made regulations. And yes, basically forcing banks to give loans to people who couldn’t afford them prior to the regulations. But the government backed them up, thus giving the banks, “0 risk”

Unfortunately, fannie/freddie collapsed, which meant the banks were screwed.

I’m not saying there wasn’t any corruption in the private sector. I AM saying there was a ton of corruption in Fannie/Freddie, and these banks were, for the most part, doing what they were told to do.

@Bladefist: Who was head of the banking committee in the Senate when they were set free? And fought all SEC regulation of derivatives? Could it be the man that said we are all just a bunch of whiners on the economy? So sad that most Americans blame this on the Republicans. So very sad indeed. As Joe Nocera stated in the times — forced to make loans had nothing to do with Fannie Mae or Freddie Mac. Pure greed by two CEOs to make as much money as possible. They succeeded unfortunately. Go ahead, believe your right-wing nut.

@snoop-blog: The “solution” is to let those giant companies fail. There are (and have been for the last 100 years or more) government vehicles for large businesses to fail. Let them go into receivership. You can still get your business done, but they have to liquidate their assets. Why the heck are there still people thinking it’s a good idea to force $2300 per man, woman and child in the US to pay for assets that are worthless?

I kinda feel a little jipped because the housing market is about to take a fall, and the house I picked up was only $30,000 under current market. (Add in the slightly less than $10,000 the bank that owned it did in foundation work and I feel marginally less bad about not waiting.)

@K J: One, your house wasn’t worth as much as you think it was. Sorry but you were lied to. Two, your bank made some very bad (and possibly corrupt) business decisions. Like all business (and people) they have to pay the price for that. Three, would you rather loosing your 401k or having it worth next to zero anyway from hyperinflation? It’s a crappy situation either way, but at least the road to recovery is faster if you take your medicine now.

Bladefist, quit it, your party is just as guilty if not more so in this than the dems. Both where bad, but the Republicans are deeply rooted in the ideals of deregulation which allowed this mess to happen. They where the ones who pushed for subprime against democrats urging (though Clinton was for it) back in 99, and they where the party who directly benefited from it through campaign financing from major conservative backers who protected their interests.

Seriously the Republican party you believe in died 40 years ago… get it through your thick skull already. We have not had true fiscal conservatives since before Nixon. The republicans of today wouldnt have a god damn clue what to do with a TRUE republican. They would be hanging both these neo-cons and the liberals out to dry.

@Bladefist: I think that might be the source of the some of the issues we’re facing now:

Republicans wanted to strictly regulate government programs and government sponsored entities (presuming all government is bad). They’re anti-regulation when it comes to private industry (assuming that private industry will ultimately result in ultimate good).

@OletheaEurystheus: Clinton, facing a veto-proof majority in the GOP-held Congress, voted for it since voting against it would be futile. And yeah, lobbyist influence.
It would have been an interesting test to see if there wasn’t a veto-proof majority on Gramm’s bill to gut Glass/Seagal, but there wasn’t, so any Dem opposition would have been moot and symbolic.

The devil is always in the details. Overall I think that the rescue/bailout was a good idea but I’m curious what crap was stuck inside the bill that no one talked about.

Also, the government did a poor job of convincing the American people the worth of the bailout. We’re just a little gun shy after supporting the Patriot Act and the war in Iraq. Someone screamed ‘jump or horrible things will happen’ one too many times.

@wesrubix: You’re so right! Except that the companies that behaved poorly had all of the money, and they will no longer loan money to those companies that behaved better, so in the end, all companies are fucked.

You can’t grow a company without leverage in today’s market, and the fulcrum’s ass is grass.

@m4ximusprim3: Hallelujah! Somebody gets it! If those hyena women on Fox News would stop gleefully talking about how this is just a shakedown that will separate “bad” risk takers from “good” risk takers maybe they’d see the writing on the wall. The shit has hit the fan, welcome to 1929, folks!

@god_forbids: I don’t think people get that if these crappy banks go down, the market will tank (worse than now) and you can kiss your 401(k) goodbye. Then of course, they’ll complain about how the government didn’t do anything to stop it. We’re in a typical “American” position where we talk tough but then don’t realize the alternative is much worse.

@ARP: We can either have the market tank now, or we can prolong things into a long downward slide. I’m one of those people who prefers to rip the band-aid off fast and get all the pain over quickly. Then quicker we hit bottom the sooner the market can start to recover.

I do disagree, however, with your implication that it is the Congressional Republicans demanding regulation. A couple of stupid Democrats and a couple of smart Republicans does not a platform make.

It’s an election year, and the biggest thing on peoples list to do is place blame. It’s higher on some peoples list then fixing the actual problem.

But the fact remains, the subject was brought up by republicans, and it was ignored. Now, I’m not making any huge allegations to this all being caused by the democrats. No No. Bush is involved, Paulson, etc. This is a bi-partisan problem. That is the truth. But to those looking to pin it on ONE party. My video makes it hard to pin on the republicans.

I’ll repeat again. This is a bi-partisan problem. And the people in government who keep pointing the finger, instead of passing legislation, need to be kicked out.

@Bladefist: Agreed. I think there is so much jockeying for position going on with the election, that nobody wants to do anything. If Dems support a bail-out, they know their opponent will run an ad that says they’re tax and spend liberals, etc. If Republicans support a bailout, their opponent will run an ad about how they support Wall street fatcats and don’t care about the poor.

The result is that they’re too paralyzed by election year politics to do the ugly, but right thing.

@Bladefist: Bush is not capable of selling this thing because half the country now believes everything he says is a lie. That’s your party and your president that has made that bed. People do that unfortunately when they feel they have been burned by lie after lie. And they were. From 9/11, to Iraq, to Katrina, to the DAs, to Cheney’s cabal, nothing but lies. Can you blame them? I know I did not vote for this worthless piece of crap in the White House once. It made me happy to see him looking old and haggard today. He deserves it.

@Bladefist: and btw, i would love to see something like this from someone that is not a wing-nut as i am not convinced on the bail out as is and i am engaged in a discussion and open on opinion. but this type of wing-nut argument just gets one laughed at by non-wing-nuts.

@chenry: The rest of the world suffered from the same greed that brought this on us. Everyone, including foreign investors, is reaping what they sowed. A lot of foreign banks are losing money because they bought garbage loans from us. We didn’t twist their arms. They were happy enough to jump on board when they thought they could all make a mint… We and they are equally culpable.

The real tragedy in all this is that the bailout, whether rightly or wrongly applied, would have provided a little more liquidity to the credit markets. I’m not in favor of excess credit, but this is going to further stagnate the already dog-dead real estate market. It is going to suffocate all the expansion capitol for small business. It is going to absolutely destroy retail as we know it. …And Barak is going to wonder where the economy went when he raises taxes for the wellfare state.

@Spiny Norman: See, I’ve heard all of Paulson’s dire predictions about how no one will be able to get a loan, but I’m not sure I believe them. If you have good credit, a good income, and are looking at houses that are realistically priced, you can still go out and get a home loan. Car dealerships are still offering financing, and credit card offers are still stuffing people’s mailboxes. I don’t see this freeze-up of consumer credit he claims is happening.

Now, there does seem to be a big psychological effect here with the stock market, but I’m not sure we should spend $700 billion in taxpayer money just to make investors feel good so they’ll prop up stocks for a few weeks.

@Orv: I sincerely hope that you are kidding about the loan thing. Paulson is absolutely right. We had a home loan–great credit, good income with a purchase price that was well within the means. We were’t going for a mcmansion. We lost the loan the week we were to close because the bank wanted us to put more than 20% equity down. It had more to do with making up the interest rate that we had locked in that was way lower than what rates were then. But we lost it and had to do round two. This was in June.

So yeah, you can get a home loan, you just can’t close it. Not to mention the same thing with commercial loans. Forget it.

@ManicPanic: Here’s another thought. Part of the reason we’re in this mess is that Americans have gone into debt well above their means. Now that reality has set in, everyone’s looking for a way to keep the debt gravy train going. Frankly, if we all had a little less access to easy credit it would probably be good for the country in the long run.

@Orv: Yes but for those who chose to not take the “easy money” in the past couple of years and waited to save and for inflated home values to go down it is tough to get a loan. I agree that we need less easy credit and it isn’t fair that people who didn’t capitalize on it are getting spanked. The offers will still be coming in the mail but I highly doubt that there is much substance behind it.

Leasing has plenty to do with the credit market. You don’t think that someone has to finance those cars? ie the bank of whatever the dealership happens to sell?

@ManicPanic: And actually, the reason they are no longer leasing or making it more difficult is because used-car values have gone down so while they finance the car for the length of the term through a lease, they can’t get their money back when someone turns in the car and they turn around to resell it. It has to do with the financial subsidiaries of the car makers.

@Orv: I don’t think we’ve seen the bottom of this yet. I believe that what you are looking at this week in the mailbox represents “the good times”. One question, does the bank that sent you the credit card application still exist? WaMu and Wachovia are now history. The interbank lending traffic is stagnant. That is going to have a ripple effect through the markets. If it cleans up America’s credit card addiction that will be a pyrrhic victory of sorts.

Secretary Paulson was looking six months in advance like most who think in market windows. It’s going to be a real bad Christmas. The sub-A mortgages will now be thrown under the bus. Those foreclosures will snowball. More financial firms will go under. The impact will be felt by the insurers. The insurers will collapse. In short, this has many of the hallmarks of 1929.

@Spiny Norman: Maybe. I’m always skeptical of people who predict the apocalypse, and that extends to Secretary Paulson.

The cynic in me also thinks that this bailout may be mainly aimed at temporarily propping up the stock market during the election. Paulson is a Republican, and he must know that McCain’s chances are hurt badly by a down market.

If I were a democrat I would be very PO’d at Nancy P. As leader you want to make sure the members in your party actually vote the way you want. Remember, the Democrats control the House this year. The only reason Republicans are causing a problem is because they’re not giving the Democrats the political cover they need in supporting this. IE the bill stinks and they want to be able to spread the blame all around.

@EBounding: Disagree. If you look at the vote number, more Dems support it, but its not strict party lines by any means. There are a significant number of Dems who oppose and Republicans who approve. Of course, if the market tanks, Republicans will blame the Dems for NOT passing it. Its a no-win situation.

See post on previous page. Election year poltics is paralyzing everyone from supporting the bailout knowing the negative ads will hammer them. The problem is that both parties know that its the right thing to do, but just can’t get past their desire to spin it into a negative ad for their opponent.

@ARP: That’s why it needs to be bipartisan. If everyone votes for it than they can’t hammer each other over it. The problem right now is that the Republican party is split over this bill. If they can work out some compromise to mollify the conservative wing of the party it will pass on a bipartisan vote.

@ARP: I know it wasn’t by straight party lines. But my point is that Democrats control the House and the Speaker should have been able to flip the votes of any shaky Democrats. If all the Democrats voted for it, it would have passed.

@EBounding: I understand but the Democrats are shaky because they want to know that the republicans (or many of them) will jump with them and not use this as fodder for another big government, spend-your-money liberal negative ad.

Its like when you were a kid and you all agreed to jump into a pool lake, etc. or do something at the same time. You look like a huge ass when you’re the only one that does it. That’s what happened today. Pelosi thought that they were all jumping together and brought it up for a vote. Republicans and some democrats voted against it either on principle or so they can gain advantage in the election year spin war. Meanwhile, our markets are tanking. So, are they putting country first? As a result, Pelosi isn’t going to look like an ass again and let it come up for a vote unless she’s sure that enough Democrats and Republicans will join her.

I’m glad it didn’t pass, and I don’t care who is responsible for that happening. Mainly because I know their reasoning doesn’t have anything to do with MY reasons for not wanting it to go through.

They need to give this time, look at the issues, and they REALLY need to be a lot more transparent about what is submitted and voted on. This whole “here’s a summary” bullshit isn’t flying. With me, anyway.

I want to see this bill. I want to read it and SEE there aren’t Pork Barrels in it. Also, if a bank is taken over, I want those golden parachutes GONE, and I don’t care if they were already there. Also, where’s the liability from the free-loading fat cats that benefitted from the under-handed financial kindling that we’re supposed to be buying?

Is there one party to blame? No, not 100% but let us not forget that everything like this seems to happen when we let banks (or S&L’s) get involved in things they really shouldn’t.

We’ve lived in this idiotic, Gordon Gecko style “Greed is Good.” fantasy for too long. A little greed is good, but it’s getting to the point where we, as a society, should learn that Laissez-Faire attempts at Capitalism are as doomed as Communism. As a smart person said recently, it’s not the quantity of regulation, but the quality.

We CANNOT afford to keep letting idiots put this or that exemption into tax, legal, stock, et al, laws. Fine, Republicans want a lower rate like Ireland (which, for your edification, Rep. Gohmert and Sen. McCain is in a bloody recession as of last week) close every loophole. Heck, lower marginal rates across the board but remove every lock, loophole, and exemption. Yes, even the sacred cow of mortgage interest.

They won’t do it, of course. Democratic or Republican, they’d be afraid to try. The current system is much better for the well connected and the pipe-dream tax schemes (such as the foolish flat tax proposed by Boortz) would destroy us. They won’t risk that, given that most have Potomac Fever.

Republicans, long ago, abandoned fiscal responsibility. They became the credit card, borrow and spend, fools. That’s even worse than tax and spend fools! Everyone’s your brother until the rent comes due. So now both parties are trying, again, to snow you. If anything, they should allow these companies to be seized by the government, and then have them auctioned off with the debt in pieces.

Ya know… This is why I never got a credit card and generally shy away from borrowing anything when I can help it… This bill came due for America, and how were we trying to pay it? With yet more credit. I think cooler, wiser heads prevailed. This was a bad idea to start with, because it was a plan made in panic, with plenty of age old greed stirred in.

The only reason this is so disastrous, politically, is because it happened slightly ahead of schedule. If the economy had cooperated and waited a year, it would have been on the shoulders of the next president, like it was supposed to be. (How’s that for cynicism and sarcasm?)

Oh my God! I cannot believe that the majority of you posters have totally bought into the “Sky is falling” panicked, emotional reactions to this.

Yes; there is a problem. but throwing over 700 billion at it, with no strings attached, still giving the CEO’s their golden parachutes, in a panicked reaction, is NOT the solution.

One poster said, “Kiss everything goodbye”. So you think that McDonald’s, Wal-Mart, Home Depot, Toyota, Kraft, etc., are all going to close shop, boarded up windows, tumbleweeds rolling by an empty parking lot? Gimme a break! Yeah, my 401k is taking a hit. But it is by no means a “Greatest Depression”. Honestly! Where are you people getting your information?

And I don’t even wanna hear a peep about how this is a “Democratic failure” or “The GOP screwed it up again”, etc. I’m just tired of the political finger-pointing, OK? You’re WRONG. Both parties are at fault, and I think everybody understands that those who WISELY SHOT DOWN this bill were on BOTH sides of the aisle. So, no more talk about what party either did or didn’t fix or break the bill. Just Shut Up.

And lastly. The whole reason behind this problem is that money was being lent to people who should not have qualified. It was encouraged, ignored, and enabled; wrongly so, and now the market is adjusting itself to compensate for this foolish practice. I say, GOOD! We now have a more realistic idea of what the market will bear.

Now, who will we blame, and what panicked political finger-pointing will occur when the credit card market suffers the same explosive deflation?